While it remains illegal to sell X-rated films over the border in NSW, the ACT's strong regulation of the industry was partly to blame for the decline of the sex movie trade in Canberra, Australian Sex Party leader and long-time adult industry advocate Fiona Patten said.

"The reality is they are still being sold elsewhere. People are just willing to risk a fine and police turn a blind eye, because they have better things to do than arrest people for selling adult films to adults.

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A Fyshwick adult store, one of the nine in the ACT that have closed since 2007.Credit:Jay Cronan

"The classification of a film costs about $1000. You have to pay a staff member to edit it. Then you have to submit it to the classification office and pay $1000 to the government – they then watch it and decide whether it's OK. If you weren't going to sell 1000 units, it's simply not worth doing," Ms Patten said.

The explosion of online porn internet sites had also taken a huge bite out of the ACT industry. While the exact size of the industry is hard to quantify, because of the number of privately operated web sites, a 2012 report by Bloomberg Businesweek estimated that in 2007, global online pornography revenue was about $20 billion, accounting for 69 per cent of the total pay-per-view Internet content, exceeding by far news, sports, and video games.

"Sadly, government regulation and a nanny-state approach has pushed most of those Ps off the table in the ACT," Ms Patten said.

One store that has managed to push back successfully against the online tide is Fyshwick-based Hello Sexy, which has been operating for 21 years.

As the internet took over, the business cleared out the racks of video reproduction equipment and began to diversify into products more suited to women, with popular items currently including couples vibrators and adult toys that can be controlled remotely via iPhone.

Manager Kristy Leigh said she was not surprised that so many of her competitors had closed, because they had failed to modernise from dark, dingy places catering largely to men.

"Twenty years ago it was all about men coming in for magazines and videos," Ms Leigh said. "Then about seven or eight years ago we noticed the trends were changing and women were becoming more liberated and that's when we completely changed the store.

"We got rid of a lot of videos and a lot of the DVDs and completely changed the concept, so it's more female friendly. The first thing you notice when you come in is shoes and dresses and that's to put women at ease."

Today, women make up about 45 per cent of Hello Sexy's customers, including many repeat visitors and couples.

"We still sell a decent amount of DVDs, and for the next couple of years I think we still will," Ms Leigh said. "With downloading there has been a steady decline and we've had to find other avenues where we can make up those losses.

"We experimented a little bit but we found that incorporating a lot more female-friendly items really helped with that. Also we pay close attention to trends, such as products that might be mentioned in movies that customers come in asking for."

The business had also looked to grow revenue from other products, like event costumes for Halloween and other occasions, she said.

Continued success for hers and other adult stores in the capital would come only to those prepared to diversify and capitalise on the advantages of bricks-and-mortar stores, such as being able to check sizes of clothes, she said.